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j. $45,000 ordinary income and $3,000 LT...View Answer
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A) $20,000.
B) $30,000.
C) $36,000.
D) $100,000.
E) $120,000.
G) A) and D)
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B) False
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B) False
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B) False
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In the short run, it would not be possible to convert the capital loss into an ordinary loss. If the client can wait more than five years for the partnership to sell the property, the character of the loss would be determined by reference to the partnership's use of the land. The builtin (precontribution) loss would
be allocated to the client and any loss arising after the contribution date would be allocated according to the provisions in the partnership agreement.
Section 724 provides that when property is sold by a partnership at a loss within five years of the date the property is contributed, any built-in capital loss at the contribution date remains a capital loss, regardless of the partnership's use of the property. For example, even if the land was considered inventory by the partnership rather than a capital asset, sale of that land within five years would result in a capital loss to the extent of the built-in loss at the contribution date.
When a partner contributes property to a partnership, any built-in gain or loss must be tracked and allocated to the contributing partner under § 704(c). Therefore, the builtin loss would be allocated to the client when the property is eventually sold.
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A) $25,000.
B) $30,000.
C) $40,000.
D) $60,000.
E) None of the above.
G) B) and E)
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B) False
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$90,000. Cody's basis is determined as f...View Answer
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B) False
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B) False
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True
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A) $68,000.
B) $78,000.
C) $95,000.
D) $98,000.
E) $102,000.
G) A) and B)
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A) Organizational choice of many large accounting firms.
B) Partner's percentage allocation of current operating income.
C) Might affect any two partners' tax liabilities in different ways.
D) Brokerage and registration fees incurred for promoting and marketing partnership interests.
E) Transfer of asset to partnership followed by immediate distribution of cash to partner.
F) Must have at least one general and one limited partner.
G) All partners are jointly and severally liable for entity debts.
H) Theory treating the partner and partnership as separate economic units.
I) Partner's basis in partnership interest after taxfree contribution of asset to partnership.
J) Partnership's basis in asset after taxfree contribution of asset to partnership.
K) Owners are "members."
L) Theory treating the partnership as a collection of taxpayers joined in an agency relationship.
M) Allows many unincorporated entities to select their Federal tax status.
N) No correct match provided.
P) H) and N)
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A) $0 gain or loss; $10,000 basis in inventory; $0 basis in partnership interest.
B) $0 gain or loss; $20,000 basis in inventory; $50,000 basis in partnership interest.
C) $20,000 capital gain; $0 basis in inventory; $0 basis in partnership interest.
D) $20,000 capital gain; $10,000 basis in inventory; $0 basis in partnership interest.
E) $20,000 ordinary income; $0 basis in inventory; $20,000 basis in partnership interest.
G) A) and E)
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A) Calculation of a § 199 deduction amount.
B) Whether to capitalize, amortize, or expense research and experimental costs.
C) The partnership's overall accounting method.
D) Whether to claim a § 179 deduction related to property acquired by the partnership.
E) All of the above elections are made by the partnership.
G) B) and C)
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A) $0 gain or loss; $30,000 basis.
B) $0 gain or loss; $50,000 basis.
C) $0 gain or loss; $60,000 basis.
D) $20,000 gain; $50,000 basis.
E) $30,000 gain; $60,000 basis.
G) A) and D)
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B) False
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B) False
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False
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A) $45,000 basis; $6,000 ordinary income; $44,000 capital gain.
B) $60,000 basis; $6,000 ordinary income; $29,000 capital gain.
C) $60,000 basis; $35,000 capital gain.
D) $75,000 basis; $0 ordinary income; $20,000 capital gain.
E) $75,000 basis; $6,000 ordinary income; $14,000 capital gain.
G) C) and D)
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A) Adjusted basis of each partnership asset.
B) Operating expenses incurred after entity is formed but before it begins doing business.
C) Each partner's basis in the partnership.
D) Reconciles book income to "taxable income."
E) Tax accounting election made by partnership.
F) Tax accounting calculation made by partner.
G) Tax accounting election made by partner.
H) Does not include liabilities.
I) Designed to prevent excessive deferral of taxation of partnership income.
J) Amount that may be received by partner for performance of services for the partnership.
K) Computation that determines the way recourse debt is shared.
L) Will eventually be allocated to partner making tax-free property contribution to partnership.
M) Partner's share of partnership items.
N) Must generally be satisfied by any allocation to the partners.
O) Justification for a tax year other than the required taxable year.
P) No correct match is provided.
R) G) and M)
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